European stocks rallied after a report showed China's economy grew in line with the government's target.

Gross domestic product in China rose 7.5% in the three months to June from a year earlier, beating the forecast for a 7.4% increase.

The data is likely to support the government's argument that its stimulus measures are working.

"That said, we continue to believe that more easing is needed to sustain the growth momentum in H2, and believe lowering financing costs remains a top priority for the People's Bank of China," Barclays Research said.

Following a quiet start to the week, today's agenda will be jam-packed with UK jobs data, US manufacturing and industrial production figures and Federal Reserve Chair Janet Yellen's testimony to the House Committee.

Yellen spoke to the Senate Banking Committee yesterday when she signalled that interest rates will remain low for some time since the US economic recovery is "not yet complete" and too many Americans remain unemployed.

Meanwhile, European Union leaders meet in Brussels today and will discuss increasing the scope of sanctions against Russia over its involvement in the Ukraine turmoil.

German Chancellor Angela Merkel said the today's summit will weigh up the possibility of stronger penalties against Russia.

Rio Tinto, Banco Epirito

Rio Tinto Group advanced as the mining company said second-quarter iron-ore production rose 11%.

Banco Espirito Santo gained on reports that one of the lender's holding companies plans to file for protection from creditors in Luxembourg.

Gtech SpA edged higher after agreeing to buy International Game Technology for $4.7bn.

The euro fell 0.11% to $1.3553.

Brent crude futures rose 0.338% to $106.38 per barrel, according to the ICE.

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